Actual cash value is based on the fact that personal belongings tend to lose value over time. Establishing ACV considers how much it costs to replace an item at today's prices and then depreciates this figure. Consider, for example, that a television may lose half its value in five years. An ACV loss settlement on a five year old television would consider the cost of a new, similar set, and reduce the payout by fifty percent.

Many insurers offer contents replacement cost coverage as an optional buy-back endorsement. This add-on removes depreciation as a personal property loss settlement factor. A local homeowners agent can provide specific cost and coverage details.

A personal property inventory can help you evaluate contents coverage needs. Make a room-by-room list of belongings. Include year, make, model, serial number and cost whenever possible. Photos, videos and appraisals are useful too. Update your contents inventory each year and adjust insurance coverage as needed.

Review the terms, limitations and restrictions of your insurance policy. Look for coverage gaps and talk to your homeowners agent. Insurance companies offer a wide range of endorsements that tailor coverage for specific needs. In addition to contents replacement cost, it may be time to consider a personal articles floater, home business equipment endorsement of back-up of sewer or drain coverage for a finished basement.